Have Joe and Joanna Q. Public been buying the stock market rally of the past five months? Not according to our data. Instead, they show that ordinary investors have been bailing out of stock funds for months. (And this was even before the last couple of weeks, when the market rise stalled and then started going into reverse.)
Read: Are you nearing retirement? Here’s how to transition your portfolio from growth to income. The data come as Fidelity Investments, the retirement plan giant, reports that average account balances fell sharply during last year’s rout. Though the Boston-based firm noted that balances rose during the fourth quarter (as the market rallied) and were higher than a decade ago. First let’s look at stock market activity by ordinary members of the public. The chart above shows money flows into and out of stock market mutual funds and ETFs. When the numbers are positive, they show that the public put more into these funds than they took out: That the public, on balance, were net investors. If the numbers are negative they show that the selling outweighed the buying: The public, on balance, were taking money out of the stock market. The numbers come from the Investment Company Institute, the fund industry’s trade association, and covers about 98% of all funds. The chart shows rolling three-month averages, to smooth out short-term variations from month to month …